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India’s rural unemployment rate climbed up for the second consecutive week as agricultural activities slowed down, reducing the capacity of this sector to absorb workers and also because parts of rural India observed fresh lockdowns.

The rural unemployment rate climbed to 7.66% in the week ended 26 July against the 7.1% reported in the week to 19 July, according to fresh data from the Centre for Monitoring Indian Economy (CMIE).

This is lower than the immediate week preceding the lockdown, but is much higher than the week ended 15 March (6.07%), when India was fairly in a better position and the covid-19 pandemic had not spread even moderately.

The national unemployment rate also inched up to 8.21% in the week ended 26 July as against 7.94% in the week to 19 July and 7.44% in the week to 12 July.

However, the urban unemployment rate dropped marginally to 9.78% from 9.92% during the same time period, CMIE data showed.

In a way, this is also the highest joblessness rate in three weeks.

Unlike June, July will not see a good recovery in replacement jobs, and fresh job creation will take time, said economists and experts. They argue that along with the summer crop sowing season, which is drawing to a close, the spreading coronavirus in rural India has impacted the employment scenario.

“The sowing season that starts in June is largely coming to an end by the end of July. This means people who were in agricultural activities during the sowing season are largely not there. A labour-surplus rural economy and less work in farming fields means more people are jobless and at home. This is a huge challenge and this may push people to come to cities again," said Arup Mitra, a professor of economics at the Institute of Economic Growth in New Delhi.

Mitra said along with the reduced demand in the field, rural India is observing a good growth in covid-19 infections.

“Look at West Bengal, Assam, Bihar, parts of Odisha, Telangana, Andhra Pradesh and many other states… you get two trends of growth in coronavirus infections and lockdown in parts. This has a direct bearing on self-employment avenues in rural India. I see this to be a trend at least in the near future and influence the employment environment there," he said.

Mitra added that anyway the rural job absorption in recent months “were not decent jobs but distressed employment in the informal sector".

Experts said urban India will see a marginal recovery as cities such as New Delhi and Mumbai are showing positive progress to some extent, but it will take time for formal jobs to return.

“First, the replacement jobs will come, then self-employment avenues and then fresh job creation once the demand in the market picks up. It’s a medium- to long-term process," added K.R. Shyamsundar, a labour economist and professor at XLRI, Jamshedpur.

True to economists’ view, the CMIE data for urban unemployment showed that it has marginally dropped to 9.43% in the week to 26 July as against 9.78% in the previous week.

Despite the decline, the urban joblessness rate is still higher than both the rural and overall unemployment rates.

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